PRESIDENT TRUMP last week slapped steep tariffs on imported solar cells and washing machines, in order, he said, to "benefit our consumers and . . . create a lot of jobs." The likelihood of achieving either of those goals is nil.
Trump imposed the solar-cell taxes at the behest of two US companies unable to match the low prices offered by their China-based competitors, which dominate the global market in solar panels. He ordered the washing machine tariffs for the benefit of Whirlpool Corp., which has been losing market share to two tenacious South Korean manufacturers, Samsung and LG Electronics.
The new duties start at 30 percent in the case of solar cells and reach all the way to 50 percent on the washing machines. The objective in both cases is to push the price of imports higher, making it easier for domestic manufacturers to compete with their overseas rivals. It's classic protectionism, which is never a good thing.
LG has already told retailers to expect an increase of $70 to $100 in the cost of new washing machines. Samsung hasn't updated its prices yet, but according to John Tamny of RealClearMarkets, a Samsung washer that previously cost $649 will now retail for $780. That's great news for Whirlpool, which now feels less pressure to compete on price, and great for Whirlpool shareholders, whose stock soared 11.6 percent following Trump's announcement. But it's bad news for consumers who need a new washing machine: Fewer will be able to afford one. And it's bad news for appliance dealers who sell washers: They'll be getting fewer customers. Lower sales will in turn lead to less work for salesmen, for delivery-truck drivers, and for appliance installers.
Once again, protectionist tariffs will have done what they always do: benefit a few domestic producers at the expense of many more consumers and workers.
In his Oval Office statement announcing the tariffs, Trump said their purpose was to "uphold a principle of fair trade and demonstrate to the world that the United States will not be taken advantage of anymore."
This is the way protectionists always talk. They portray foreign sellers as economic aggressors, who "dump" their wares on the US market and "take advantage" of Americans by engaging in "unfair" trade.
Yet the overseas manufacturers have taken advantage of nobody. Samsung and LG don't force Americans to buy their machines — they encourage them to do so, by offering features and designs that Americans like at prices Americans find attractive. Not a single Samsung or LG washer enters the United States unless a buyer has chosen to import it. The only party engaging in economic aggression here is the White House. Trump's tariffs will penalize the Korean companies not for doing something wrong, but for supplying Americans with choices Whirlpool wasn't giving them. Consumers will be the losers, victimized by a government more interested in protecting a peevish company from lively competition than in protecting the gains that lively competition yields.
Tariffs and trade barriers always do greater harm than good. Trump's tariffs on imported solar panels may, perhaps, enable domestic solar manufacturers to secure a few hundred jobs. But consider the rest of the story.
Thanks to inexpensive cells imported from China, US companies that install solar panels have flourished in recent years. "Installations have jumped tenfold since 2010," AP reported last week. Now, as new tariffs drive up the price of the cells on which the solar industry relies, many projects will be cancelled. According to the Solar Energy Industries Association, the new tariffs will wipe out 23,000 jobs in 2018. Trump's tariffs will hurt innocent people. Protectionist barriers always do.
The right to peacefully buy and sell across borders is not a privilege. It's a right, one that governments should infringe only under the most dire circumstances. America faces many threats, but affordable washing machines and solar cells aren't among them.
Join the conversation as a VIP Member